TOKYO, Feb 1 (Reuters) – Japan Airlines (JAL) on Monday cut its full-year forecast to a record operating loss of 420 billion yen ($4 billion) as a fresh surge in coronavirus infections dampened expectations for a recovery in domestic travel.
The new forecast compares with a loss of between 330 billion yen and 380 billion yen it predicted three months ago. That was worse than an average 338.8 billion yen loss forecast based on estimates from eight analysts, Refinitiv data shows.
Like bigger local rival ANA Holdings, JAL saw a demand recovery on domestic routes towards the end of last year helped by government subsidies for air tickets and hotels. A resurgence in coronavirus cases, however, forced authorities to halt that tourism campaign and reinstate lockdowns in major cities.
Passenger numbers on domestic flights recovered to around half of the previous year’s level in the second half of 2020.
On Monday, however, the carrier said it expects demand on domestic flights to drop this month to around 20% of levels seen a year ago, or less than a third of what it had predicted before the latest wave of coronavirus infections.
Passenger numbers on international routes are still only about 5% of pre-pandemic levels.
Japan Airlines has so far not cut workers’ salaries to cope with the travel slump, but it has sent some of its staff to work at hotels and other outside companies to avoid laying them off.
In a bid to cut costs the carrier last year said it planned to retire 24 of its Boeing Co. 777 widebodies by March 2023.
The company in November shored up its finances by raising 183 billion yen through a new stock offering equivalent to 30% of its existing shares.
In the three months to Dec. 31 the airline posted a third quarter operating loss of 70.2 billion yen compared with a profit of 31.7 billion yen profit a year ago. That was worse than an estimated average 54.8 billion yen loss from three analysts surveyed by Refinitiv. ($1 = 104.6700 yen) (Reporting by Tim Kelly; Editing by Kim Coghill and Stephen Coates)